Ask your future partner the ugly questions first

Quick answer: Before anyone writes a check, sit down and settle five things: who puts in what, who decides what, how you get paid, what happens if one of you stops pulling, and how one of you leaves. Then pay a lawyer in your state to put it on paper.

Picture two friends who've known each other since high school. One's a welder. The other runs sales for a roofing supplier. They each put $15,000 into a mobile welding rig and shake on it. Fifty-fifty. Nobody writes anything down, because they're friends.

Eighteen months later the welder is on the job sixty hours a week. The salesman has a new baby and a day job he can't afford to leave. The welder wants to hire a helper. The salesman wants to take money out to cover a truck payment. Both think they're being reasonable. Both are right, and that's the trouble. Nothing is wrong with either man. They just never agreed on anything.

That's how most partnerships end. Nobody cheats. Two decent people carried two different pictures in their heads, and the money exposed it.

Start with the bad day, not the good one

Everybody can talk about the good day. Revenue's up, the phone's ringing, the van has your name on it. Any two people can agree on that.

The conversation that matters covers the days you'd rather not picture. Somebody gets sick. Somebody's marriage goes through a rough year. Somebody gets a job offer too good to refuse. Somebody just gets tired. You don't ask these questions because you expect them. You ask because you're going to be a different person in three years, and so is he.

The five questions

1. What does each person put in? Cash is easy to count. Everything else gets fuzzy. Write down the money, the tools, the truck, the client list and, most of all, the hours. "Full-time" means something different to every man alive, so put a number on it. Forty hours? Sixty? Nights and weekends only?

If one of you is putting in the money and the other the labor, say that out loud and decide what each is worth. Both are real contributions. They just aren't the same contribution, and a 50/50 split might not fit them.

2. Who decides what? Two equal owners with no tiebreaker is a coin flip waiting to happen. Pick lanes. One of you owns operations. The other owns sales and the books. Inside your lane, you decide.

Then set a spending line. Anything over $500, say, needs both signatures. Pick your own number, but pick one. And name a tiebreaker for the big stuff, whether that's a trusted outside advisor or a rule that deadlocks mean you wait thirty days and talk again.

3. How do you get paid, and when? This is where friendships go to die quietly. One partner needs income now. The other can live on beans for a year. Decide whether you pay yourselves before profit or after, how much, and what you leave in the business. Decide who's allowed to pull money out and under what conditions.

If you can't both explain the answer to your wives in one sentence, it isn't clear enough yet.

4. What if one of you stops pulling his weight? Nobody wants to ask this. Ask it anyway. A man who walks away after six months shouldn't leave with half of what the other man built over the next five years.

Many partners handle this by earning their ownership over time instead of getting it all on day one. Lawyers call it vesting. Whether it fits your deal, and how it's set up in your state, is a question for an attorney. Just raise it now, when it's an idea and not an accusation.

5. How does somebody leave? Death, disability, divorce, burnout, a better offer. Each one needs an answer. How is the business priced? Who gets first right to buy? Can a partner sell his share to a stranger, or does it have to come to you first? How's it paid, in one check or over three years?

A written buy-sell agreement answers these. Some partners fund it with life or disability insurance so a widow isn't suddenly co-owner with her late husband's partner, and so the survivor isn't stuck trying to raise a buyout from nothing. An attorney and an insurance professional can tell you what fits your situation. Neither one will take offense at the question.

Bring your wife into it

Your spouse isn't on the paperwork, but she's on the hook. If the business signs a lease or a loan with a personal guarantee, your house and your savings sit behind it. That means her house and her savings too.

So tell her before you sign anything. Lay out the five answers at the kitchen table. Let her ask questions. She'll likely ask one you missed, and if she's got doubts, you want them now and not after the money's gone. The same goes for your partner's wife. Two families are betting on this.

Write it down, and pay for it

A handshake is a fine start. It's a lousy contract. Once there's money, a lease, a loan or a single customer depending on you, get an operating agreement or partnership agreement drawn up by an attorney licensed in your state. The rules differ by state and by business type, and I'm not your lawyer. What I can tell you is that the bill for that paper is a fraction of what the first real fight will cost.

Then put one more thing in writing: the numbers you both see every week. Both partners looking at the same page keeps the arguments about facts instead of feelings. Run your week off one page of numbers shows you how, and Read your own profit and loss in ten minutes a month covers the monthly check.

Sometimes the answer is no

Be honest about a case where all this goes the other way. You might work through the five questions and find you don't want a partner. You want a worker. The man who can't put in sixty hours or take real risk might be better as an employee, or a contractor on a good rate, with you keeping the ownership and the final say.

That's not a failure of friendship. It's a more honest arrangement than a partnership one of you will resent. If you do hire, what to file before your first employee starts covers the paperwork.

And if you're doing a side project with a buddy and the money at stake is a few hundred dollars, one page and a handshake will do. The rule scales. The more it costs to be wrong, the more you write down.

Serve him, and keep your spine

Be generous with your partner. Carry your end and a little of his on a bad month. Pay what you owe before he asks. But don't let kindness stand in for clarity. Saying no to a vague deal is the kindest thing you can do for a friend. Vague deals are where grudges are born.

And if it does end, leave it better than you found it. Books clean, debts paid, tools returned sharper than they came. Two men who can part that way can usually still sit together at a ball game.

Have the talk this week, over coffee, before either checkbook comes out. The friend worth going into business with is the one who'll answer the ugly questions without flinching.